Congressional Scrutiny for College Sports' Tax Status
A prominent US lawmaker, expressing deep scepticism, has formally requested a Congressional analysis of the tax-exempt status enjoyed by college sports. This move comes as the Big Ten conference negotiates a monumental $2.4 billion deal with a private investor, a agreement that could fundamentally reshape the financial landscape of US collegiate athletics.
Senator Maria Cantwell, a Democrat from Washington, submitted a detailed letter to the head of the Congressional Joint Committee on Taxation on Monday, 17 November 2025. In it, she argued that "legitimate questions have been raised about whether it is time to rethink the tax-exempt regime" that currently governs organisations like the NCAA, its member schools, and their athletic conferences.
Key Questions and Financial Stakes
Senator Cantwell, who holds a senior position on the Senate committee overseeing college sports, posed several critical questions for the analysis. She inquired whether Congress should rewrite tax rules for name, image, and likeness (NIL) collectives, which often work with schools to facilitate payments to athletes. Her letter cited existing analysis suggesting these collectives do not qualify for tax-exempt status.
Further points of scrutiny included potential measures to address "excessive compensation for coaches" and the size of their contract buyouts. The senator also asked for an examination of the tax implications for athletes themselves if they were to be reclassified as employees or independent contractors.
The timing of this request is pivotal. The Big Ten conference is currently facing internal resistance from powerhouse members, including the University of Michigan and the University of Southern California (USC), over the proposed media rights deal. This arrangement would place the league's media rights and other properties into a separate business entity, with a private investor holding a stake, and could lock in deals through the year 2046.
Internal Resistance and Broader Consequences
Leaders from Michigan and USC have voiced significant reservations, citing concerns over an uneven distribution of the massive funds and the overall impact of partnering with a private, for-profit entity. USC athletic director Jennifer Cohen emphasised the value of the university's brand in a letter to boosters, stating, "We will always fight first for what’s best for USC."
This is not Senator Cantwell's first intervention. Last month, she sent a warning to Big Ten leaders, spelling out the high stakes. She noted that media revenues are currently not taxed because they are considered related to a university's educational purpose. However, she cautioned that when a private, for-profit investor holds a stake, it raises serious questions about whether that revenue loses its connection to the institution's tax-exempt educational mission.
The outcome of this Congressional analysis could have profound consequences, potentially challenging the financial foundations of major college sports programmes across the United States and forcing a long-overdue reckoning with their commercial nature.
